Junk Bond Fund Outflows Accelerated to $892 Mln Last Week

By Michael Aneiro

The junk-bond market continued to take a much-needed breather last week after soaring in September, and after previously soaring through pretty much all the rest of 2012, largely on the strength of torrential investor inflows. Junk bond funds and ETFs saw a second straight week of net outflows last week, with the outflows accelerating to an $892 million weekly clip from $310 million the week before. Prior to that, the same funds had tallied 15 consecutive weeks of net inflows.

Junk bonds have retreated from their September foray into record-low yield territory (6.2%) and record-high dollar prices (104.2 cents on the dollar). The latest read on the Bank of America Merrill Lynch High Yield Master II index shows the junk bond market still gained 0.404% in the week ended Thursday and is now up 12.39% on the year. The average junk bond now trades at 103.44 cents on the dollar at average spread of 562 basis points over Treasuries and a 6.454% the average yield.

The SPDR Barclays Capital High Yield Bond ETF (JNK) was trading at $40.18 Friday, from $40.30 a week earlier, while the iShares iBoxx $ High Yield Corporate Bond Fund (HYG) was at $92.39, down from $92.74 a week ago.

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